Thursday, March 13, 2008

A Systematic Lie

Honest idiots are never this wrong

I've just listened to Darling being interviewed on BBC R4 Today. In fairness to Evan Davis, he had a good go at forcing the Chancellor to admit his borrowing forecasts are wildly optimistic and asked why anyone should believe them?

Naturally Darling declined to answer, wittering on instead about how the world is very difficult and it is right to blah blah blah.

But Reform's table above tells us all we need to know. It shows how each of the last five years has produced a borrowing outturn up to 9 times higher than the initial government estimate.

One possibility is incompetence, but blind incompetence would surely have produced a random pattern of errors. Moreover this has been a period where growth has turned out stronger than most expected, so if anything, future borrowing should have been overestimated.

No, the forecasts have been systematically massaged down throughout the whole period, and the massaging is almost certainly even worse in this Budget.

As an ex-HMT budget forecaster myself, I find this very depressing. Treasury forecasts of the public finances used to be lily-white... well, white, anyway. They have always turned out over or under (public borrowing is the difference between two Very Large Numbers), but they were not sytematically biased.

Responsibility for public finance forecasts should be taken away from the Treasury. We desperately need an independent Office of the Budget, modelled on the National Audit Office, and charged with producing non-partisan forecasts and analyses of public sector revenues, expenditure, borrowing, and debt.

Tyler hereby volunteers to be its first head.

PS This is the second time I've heard a Today finance/economics interview conducted by one of the anchors but with Davis chipping in some more informed follow-up questions. It works much better than the usual set-up where the interviewer simply doesn't know enough to pursue the lies. Let's hope Davis develops this when he joins Today full-time. We might even overlook those nipple rings.

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